Choosing the Right Exit Strategy: A Critical Decision for Business Owners

Khaled Baranbo

Right Exit Strategy


Discover the best exit strategies for your business in Canada. Learn about third-party sales, family succession, employee buyouts, and management buyouts, and their impact on your selling price.


Once you've decided to sell your business and determined its value, the next step is to choose an exit strategy. This involves carefully considering your personal and business goals, market conditions, and the various options available to you.


Read on: How to sell my business in Canada

right exit strategy in Canada

Common Exit Strategies:


  • Third-Party Sale: Selling to an outside buyer, such as a strategic acquirer or private equity firm, can maximize the selling price and provide a clean break from the business. This strategy often involves a competitive bidding process to attract the highest offer.
  • Family Succession: Transferring ownership to a family member can help maintain the business's legacy and ensure a smooth transition. This strategy can be ideal for preserving family values and ensuring the business stays within the family.
  • Employee Buyout: Selling to your employees can reward their loyalty and dedication while preserving the company culture. This strategy can be a good option for businesses with a strong and dedicated workforce.
  • Management Buyout: Allowing your management team to purchase the business can provide continuity and maintain stability. This strategy can be beneficial for businesses with a capable and experienced management team.


Factors to Consider:


When choosing an exit strategy, consider the following factors:


  • Personal Goals: What are your reasons for selling? Are you looking to retire, pursue new opportunities, or simply maximize your investment?
  • Business Goals: What are your aspirations for the future of the business? Do you want to see it continue to grow and thrive under new ownership?
  • Market Conditions: What is the current state of the market for your industry? Are there potential buyers interested in acquiring businesses like yours?
  • Financial Resources: Do you have the financial resources to facilitate a specific exit strategy, such as financing an employee buyout?
  • Timeline: How quickly do you need to sell your business? Some exit strategies may take longer than others.


Exit Strategy Comparison

Exit Strategy Pros Cons Influence on Selling Price
Third-Party Sale - Potential for highest price. Clean break from the business. Access to a wider pool of buyers - More complex transactions. Potential for loss of control. May require more preparation Highest potential price
Family Succession - Maintain family legacy. Smoother transition. Potential for tax benefits - Limited pool of buyers. Potential for family conflicts. May require significant financing Lower than third-party sale
Employee Buyout - Reward loyal employees. Preserve company culture. Potential for tax benefits - Limited financing options. Potential for management challenges. May require significant time for transition Lower than third-party sale
Management Buyout - Maintain continuity. Preserve management expertise. Potential for a smoother transition - Limited pool of buyers. Potential for conflicts of interest. May require significant financing Lower than third-party sale

Business Brokers and Exit Strategies


Business brokers can help you evaluate the pros and cons of each exit strategy and choose the best option for your specific circumstances. They can also help you prepare your business for sale, identify potential buyers, and negotiate the terms of the deal.


Contact us today to discuss your exit strategy options and learn more about how we can help you sell your business.

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